BAWAG Group AG: H1 2022 net profit of EUR 245 million, EPS EUR 2.74, and RoTCE of 17.5%

Vienna (pta007/21.07.2022/07:00 UTC+2)

• Net profit of EUR 134 million, EPS of EUR 1.50 and RoTCE of 19.0% for Q2 '22
• Net profit of EUR 245 million, EPS of EUR 2.74 and RoTCE of 17.5% for H1 '22
• Pre-provision profit of EUR 418 million (+16% vPY) and CIR at 36.3%
• Risk costs of EUR 51 million … continued to build up our ECL management overlay to EUR 70 million
• Share buyback of EUR 325 million approved and to start on July, 25
• CET1 ratio of 12.7% post-deduction of H1 '22 dividend accrual and approved share buyback of
  EUR 325 million
• 2022 targets reconfirmed: Profit before tax > EUR 675 million, RoTCE > 17%, and CIR < 38%
• Updating outlook for core revenue growth > 7% in 2022

VIENNA, Austria – July 21, 2022 – BAWAG Group today released its results for the first half 2022, reporting a net profit of EUR 245 million, EUR 2.74 earnings per share, and a RoTCE of 17.5%.

The operating performance of our business was strong during the first half 2022 with pre-provision profits of EUR 418 million and a cost-income ratio of 36.3%. Total risk costs were EUR 51 million. Despite our record low NPL ratio of 1.4% (1.0% excluding City of Linz legal case) and robust credit performance across our business to-date, we decided to remain prudent in our provisioning given the current market environment and potential headwinds building up, increasing our management overlay provisions by EUR 9 million to a total of EUR 70 million.

Average customer loans were up 5% versus prior quarter and up 13% versus prior year. At the end of June 2022, the CET1 ratio was at 12.7%. We generated approximately 120 basis points of gross capital from earnings during the first six months 2022. The CET1 ratio already considers the deduction of a share buyback of EUR 325 million to be executed in 2022 as well as EUR 135 million dividend for the first half 2022 (based on our dividend policy).

Anas Abuzaakouk, CEO, commented: "In the first half 2022 we delivered a strong set of results with net profit of EUR 245 million, EPS of EUR 2.74, an RoTCE of 17.5% and a cost-income ratio of 36.3%. Additionally, we remained prudent in our provisioning, increasing our management overlay by EUR 9 million during the first half, which currently stands at EUR 70 million, equal to almost one year of normalized risk costs. Our actions stem from an abundance of caution, which is the same prudence and conservatism that underpins how we've run our business over the past decade. We have a resilient business that will deliver results across all cycles with a strong earnings capacity, strong capital generation, solid asset quality, conservative and disciplined underwriting, and a retail deposit franchise that is the foundation of our funding."

Delivering strong results in H1 2022

Core revenues increased by 9% to EUR 651 million in the first half 2022. Net interest income rose by 7% to EUR 492 million, driven by higher average customer loans. Net fee and commission income increased by 16% to EUR 159 million, driven by the contribution stemming from the acquisition of Hello bank! Austria in Q4 '21 and the ongoing recovery from decreased customer activity driven by the pandemic. While our advisory and brokerage business had a strong first quarter, it has been slightly impacted from the current market volatility experienced in Q2 '22. Operating expenses decreased by 2% as a result of multiple operational initiatives executed over the past two years, more than compensating significant inflationary pressures. The cost-income ratio decreased by 4.0 points to 36.3%. This resulted in a pre-provision profit of EUR 418 million, up 16% versus prior year.

The first half 2022 also included regulatory charges of EUR 46 million, down 19% versus prior year, reflecting recoveries from prior bank insolvencies, while the SRB contribution increased. The regulatory charges booked in the first half 2022 represent approximately 85% of the full-year charges that are expected to be required during 2022.

Risk costs were EUR 51 million in the first half 2022, a decrease of EUR 2 million, or 5%, compared to the previous year. While the underlying asset quality remains strong, we decided to remain prudent in our provisioning given the overall market environment. Therefore, we increased the ECL management overlay by EUR 9 million to EUR 70 million.

Our goal is, and will always be, maintaining a strong balance sheet, solid capitalization levels, low leverage and conservative underwriting, a cornerstone of how we run the Bank. The customer loan book is comprised of 73% exposure to the DACH/NL region (Germany, Austria, Switzerland, Netherlands) and 27% exposure to Western Europe and the United States. Our NPL ratio of 1.4% is one of the lowest across Europe (1.0% excluding the City of Linz receivable), with a conservative reserve ratio of 1.4% on customer loans, an increase of 42 basis points on pre-pandemic levels, despite a decreasing NPL ratio.

Customer Business performance in H1 2022 versus H1 2021

Outlook

In our outlook for 2022, we see full year core revenues growing by over 7% and operating expenses down by approximately 2%. We expect regulatory charges to be around EUR 55 million and total underlying risk costs amounting to approximately 20 basis points risk cost ratio. In addition we will continue to build up the management overlay. We are targeting a profit before tax over EUR 675 million. In terms of return targets, we target a RoTCE over 17% and a CIR under 38% in 2022.

Our 2022 outlook was updated as follows:

Note: Financial and return targets are excluding any outcome of the City of Linz case. Dividend payout will be based on net profit excluding a City of Linz case impact.

About BAWAG Group

BAWAG Group AG is a publicly listed holding company headquartered in Vienna, Austria, serving 2.2 million retail, small business, corporate, real estate and public sector customers across Austria, Germany, Switzerland, Netherlands, Western Europe, and the United States. The Group operates under various brands and across multiple channels offering comprehensive savings, payment, lending, leasing, investment, building society, factoring and insurance products and services. Our goal is to deliver simple, transparent, and affordable financial products and services that our customers need.

BAWAG Group's Investor Relations website https://www.bawaggroup.com/ir contains further information, including financial and other information for investors.

Contact:

Financial Community:

Jutta Wimmer (Head of Investor Relations)
Tel: +43 (0) 5 99 05-22474
IR Hotline: +43 (0) 5 99 05-34444
E-mail: investor.relations@bawaggroup.com

Media:

Manfred Rapolter (Head of Corporate Affairs)
Tel: +43 (0) 5 99 05-31210
E-mail: communications@bawaggroup.com

This text can also be downloaded from our website:

https://www.bawaggroup.com

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Emitter:	BAWAG Group AG Wiedner Gürtel 11 1100 Wien Austria
Contact Person:	BAWAG Group Investor Relations
Phone:	+43 (0)59905-34444
E-Mail:	investor.relations@bawaggroup.com
Website:	www.bawaggroup.com
ISIN(s):	AT0000BAWAG2 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Official Trade)